The Global The Global MarketplaceMarketplace

Chapter 19Chapter 19

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Objectives

Understand how the Understand how the international trade system, international trade system, economic, political-legal, and economic, political-legal, and cultural environments affect a cultural environments affect a company’s international company’s international marketing decisions.marketing decisions.Learn three key approaches to Learn three key approaches to entering international markets.entering international markets.

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Objectives

Understand how companies Understand how companies adapt their marketing mixes adapt their marketing mixes for international markets.for international markets.Learn how to identify the three Learn how to identify the three major forms of international major forms of international marketing organizations.marketing organizations.

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1900: Coca-Cola 1900: Coca-Cola was available in was available in foreign countriesforeign countriesEarly branding Early branding efforts placed logo efforts placed logo prominently abroadprominently abroad1971: “I’d like to buy 1971: “I’d like to buy the world a Coke” the world a Coke” TV adTV ad

Coca-cola has recently Coca-cola has recently entered India, China and entered India, China and IndonesiaIndonesiaConsistent positioning Consistent positioning and taste worldwideand taste worldwideAds and promotions are Ads and promotions are adapted to local marketsadapted to local marketsSprite: a global successSprite: a global success

cCoca-ColaCoca-Cola

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Definition

Global FirmGlobal Firm A firm that, by A firm that, by

operating in more than operating in more than one country, gains one country, gains R&D, production, R&D, production, marketing, and marketing, and financial advantages in financial advantages in its costs and reputation its costs and reputation that are not available to that are not available to purely domestic purely domestic competitors.competitors.

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International trade is boomingInternational trade is boomingMany U.S. firms are successful Many U.S. firms are successful international marketersinternational marketersGlobal competition is intensifyingGlobal competition is intensifyingGlobal companies face several Global companies face several problemsproblemsCompanies face six major decisions Companies face six major decisions in international marketingin international marketing

Global Marketing in the 21st Century

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Figure 19-1:

Major Decisions in International Marketing

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The International Trade SystemThe International Trade System Tariffs, quotas, embargos, exchange Tariffs, quotas, embargos, exchange

controls, nontariff trade barrierscontrols, nontariff trade barriers World Trade Organization and GATTWorld Trade Organization and GATT Regional free trade zonesRegional free trade zones

European UnionEuropean Union North American Free Trade AgreementNorth American Free Trade Agreement Other free trade areasOther free trade areas

Looking at the Global Marketing Environment

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Economic EnvironmentEconomic Environment Industrial structureIndustrial structure

Subsistence economiesSubsistence economies Raw material exporting Raw material exporting

economies economies Industrializing Industrializing

economies economies Industrial economiesIndustrial economies

Income distributionIncome distribution

Looking at the Global Marketing Environment

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Political-Legal EnvironmentPolitical-Legal Environment Attitudes toward Attitudes toward

international buyinginternational buying Government bureaucracyGovernment bureaucracy Political stabilityPolitical stability Monetary regulationsMonetary regulations

CountertradeCountertrade• BarterBarter• CompensationCompensation• CounterpurchaseCounterpurchase

Looking at the Global Marketing Environment

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Cultural EnvironmentCultural Environment Impact of Culture on Impact of Culture on

Marketing StrategyMarketing Strategy Cultural traditions, Cultural traditions,

preferences, behavior preferences, behavior Impact of Marketing Impact of Marketing

Strategy on CulturesStrategy on Cultures Globalization vs. Globalization vs.

Americanization Americanization

Looking at the Global Marketing Environment

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Overlooking cultural differences can result in embarrassing mistakes. Nike found that this stylized “Air” logo resembled “Allah” in Arabic script

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Not all companies Not all companies need an international need an international presencepresenceGlobalization may be Globalization may be triggered by several triggered by several factorsfactorsRisk and the ability to Risk and the ability to operate globally must operate globally must be carefully assessedbe carefully assessed

Deciding Whether to Go International

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Define international Define international marketing polices and marketing polices and objectives, and sales objectives, and sales volume goalsvolume goalsDecide how many Decide how many countries to targetcountries to targetDecide on the types of Decide on the types of countries to entercountries to enter

Deciding Which Markets to Enter

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Screen and rank each Screen and rank each of the possible of the possible international markets international markets using several criteriausing several criteria Market size, market Market size, market

growth, cost of doing growth, cost of doing business, competitive business, competitive advantage, risk leveladvantage, risk level

Deciding Which Markets to Enter

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Consider beauty products Consider beauty products such as anti-aging creams, such as anti-aging creams, cosmetics, and hair dyes.cosmetics, and hair dyes.

What International markets What International markets would offer an attractive would offer an attractive target. What particular target. What particular markets should your markets should your company avoid? company avoid?

Discussion Question

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Figure 19-2:

Market Entry Strategies

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Tokyo Disneyland is owned and operated by a Japanese development company under license from Walt Disney Company

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ExportingExporting Direct vs. indirectDirect vs. indirect

Joint VenturingJoint Venturing Licensing, contract Licensing, contract

manufacturing, manufacturing, management management contracting, joint contracting, joint ownershipownership

Direct InvestmentDirect Investment Assembly facilities, Assembly facilities,

manufacturing facilitiesmanufacturing facilities

Deciding How to Enter the Market

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Figure 19-3:

Five International Productand Promotion Strategies

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Standardized Marketing Standardized Marketing MixMix Same basic product, Same basic product,

advertising, distribution, advertising, distribution, and other elements of and other elements of the marketing mix are the marketing mix are used in all international used in all international markets.markets.

Deciding on the Global Marketing Program

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Adapted Marketing MixAdapted Marketing Mix The marketing The marketing

mix elements mix elements are adjusted are adjusted for each for each international international target market.target market.

Deciding on the Global Marketing Program

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Global Market Product StrategiesGlobal Market Product Strategies Straight product expansionStraight product expansion

Marketing the product with no changesMarketing the product with no changes Product adaptationProduct adaptation

Altering the product to meet local Altering the product to meet local conditions or the wants of the foreign conditions or the wants of the foreign market market

Product inventionProduct invention Creating new products or services for Creating new products or services for

foreign markets foreign markets

Deciding on the Global Marketing Program

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Global Promotion Strategies Global Promotion Strategies Standardized global communication Standardized global communication

Advertising themes are standardized Advertising themes are standardized from country to country with slight from country to country with slight modifications modifications

Communication adaptationCommunication adaptation Advertising messages are fully Advertising messages are fully

adapted to local markets adapted to local markets

Deciding on the Global Marketing Program

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Guy Laroche standardizes global advertising but adapts to meet cultural differences. The Arabian version is less sensual.

European Arabian

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Global Pricing Global Pricing StrategiesStrategies Companies face Companies face

many problemsmany problems Price escalationPrice escalation Pricing to foreign Pricing to foreign

subsidiaries subsidiaries Recent economic Recent economic

and technological and technological forces forces

The InternetThe Internet

Deciding on the Global Marketing Program

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What adjustments What adjustments might need to be made might need to be made to the pricing, to the pricing, promotion, or product promotion, or product itself if Cracker Jack itself if Cracker Jack were marketed in were marketed in Japan, England, and Japan, England, and Egypt? Egypt?

Discussion Question

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Figure 19-4:

Whole-Channel Concept for International Marketing

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Whole-channel viewWhole-channel view Seller’s Seller’s

headquarters headquarters organization organization

Channels Channels betweenbetween nations nations

Channels Channels withinwithin nations nations

Numbers & types Numbers & types of intermediaries of intermediaries

Deciding on the Global Marketing Program

Global Distribution Channels Global Distribution Channels

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Managing International Managing International Marketing ActivitiesMarketing Activities Step 1:Step 1: Organize export Organize export

departmentdepartment Step 2:Step 2: Create an Create an

international divisioninternational division Step 3:Step 3: Become a global Become a global

organizationorganization

Deciding on the Global Marketing Organization